Qantas has asked that its shares remain suspended until the beginning of trade on Monday.

Tim Wimborne, file photo: Reuters

Standard and Poor's has downgraded Qantas's credit rating to sub-investment grade, a day after the company announced plans to sack 1,000 workers over the next 12 months.

S&P lowered the airline's credit rating from BBB- rating, which is the lowest investment grade rating, to BB+.

A below-investment-grade rating is known as "junk" status among professional investors.

The downgrade sends a warning to investors about the airline's capacity to repay its debts.

It could also increase the airline's borrowing costs.

"The downgrades reflect our view that intense competition in the airline industry has weakened Qantas' business risk profile to 'fair' from 'satisfactory', and financial risk profile to 'significant' from 'intermediate'," S&P said in statement.

"We don't expect Qantas to recover to a credit profile commensurate with a 'BBB-' rating in the near term."

Along with yesterday's announcement of job cuts, Qantas said it plans to record a pre-tax loss of between $250 million and $300 million for the first half of this financial year.

The airline's shares were placed an a trading halt ahead of the announcement, after losing 11.2 per cent in trade yesterday.

Its share price again dropped when trading resumed this afternoon.

At 12:45pm (AEDT), they were trading 1.4 per cent lower at $1.04.

Downgrade 'non unexpected'

In a statement released after the credit downgrade, Qantas chief financial officer Gareth Evans said S&P's decision was "not unexpected".

"It highlights the unprecedented pressures that the Qantas Group is facing from several external forces but particularly from an uneven playing field in the Australian aviation market," he said.

"The Qantas Group retains a strong financial position, including a large cash balance and a significant asset base."

Mr Evans said the airline is in "continuing discussions with the Australian Government regarding the uneven playing field in the local aviation sector, which has distorted the fundamentals of the market."

Abbott rules out subsidies

Prime Minister Tony Abbott has rejected calls from the opposition, unions and senior Qantas executives for Government intervention to prop up the the airline.

"If we subsidise Qantas, why not subsidise everyone?" he said during an interview on 3AW.

"If we subsidise everyone, that's just a bottomless pit into which we will descend and if we offer a guarantee to Qantas then why not offer a guarantee to everyone?"

Mr Abbott says the Government's duty is to create the right conditions for businesses to operate profitably.

"Businesses have to operate profitably and in the end they have to operate profitably because of their own decisions and from their own resources."

It comes after the ratings agency Moody's announced last night that it is reviewing the airline's credit rating.

Restructure benefits 'will take time'

S&P notes that Qantas has embarked on a $2 billion dollar cost-cutting program, in an effort to improve its financial position.

"Notwithstanding Qantas' good track record of executing these cost-cutting strategies to preserve cash and improve its cost position, we believe the benefits would take time to realize and it's unlikely to offset the cyclical and structural headwinds facing Qantas," its statement said.

"The ratings could be lowered if Qantas fails to arrest the downward trend in its profitability to the extent that credit metrics worsen considerably."